Seafood New Zealand chief executive Tim Pankhurst. (Photo Credit: Stock File)
Whereas the Free Trade Agreement (FTA) with the Republic of Korea settled after five years’ negotiations has been welcomed by New Zealand official authorities, who claim it will offer "real economic benefits" for both parties, it is deemed unsatisfactory to the fishing sector.
The FTA announced by Prime Minister John Key is “overall disappointing for seafood,” according to Seafood New Zealand chief executive Tim Pankhurst.
“While there are some improved trading conditions for some seafood in the first three years, including salmon and some mussel products, it is disappointing the significant squid trade has been excluded entirely from any benefit,” Pankhurst pointed out.
On the other hand, New Zealand Trade Minister Tim Groser considers it’s a win-win agreement.
“The FTA will deliver real economic benefits for both our countries. It will create more opportunities for our business and will deliver cheaper products to consumers,” the minister pointed out.
“There are positive outcomes for agricultural exports, as well as the forestry sector, the fisheries industry and exporters of all industrial goods. Government procurement, trade in services and investment are all subject to high quality commitments,” Groser concluded.
According to official authorities, on entry into force, tariffs will be eliminated on 48 per cent of current New Zealand exports. Tariff cuts under this FTA will create an estimated duty saving of NZD 65 million (USD 51.4 million) in the first year alone. Duties on New Zealand’s current exports will largely be eliminated within 15 years of entry into force.
South Korea is New Zealand’s sixth largest export destination for goods and services and eighth largest import source of goods and services, with total two-way trade of NZD 4 billion (USD 3161 million) in the year ending June 2014.
The Trade Minister believes that improving access to international markets through FTAs is a key component of the Government’s Business Growth Agenda and that supporting their exporters is crucial to creating new jobs and boosting incomes for New Zealanders.
Meanwhile, industry sources informed that Korea operates a two tier system on fish caught in New Zealand waters. And if it is from a New Zealand flagged vessel, the catch faces the full effect of tariffs. But if the fish is landed in New Zealand from a Korean flagged charted vessel, it enters the Korean market tariff free, classed as domestic product.
The foreign charter vessel legislation introduced this year will require all vessels fishing in New Zealand waters to be New Zealand flagged from 2016.
With the new FTA, exports of frozen mussels on the half shell will be restricted to an annual quota of 1600 tonnes tariff free. And exports over this quota will have a 20 per cent impost. The quotas will grow annually by 6 per cent for the next 16 years, equivalent to a 150 per cent increase over that time.
In this regard, the sector highlights that competing frozen mussels from Chile will continue to be allowed to enter the Korean market tariff free without any restriction on trade volume.
Current seafood exports to Korea are worth about NZD 50 million (USD 39.5 million) annually, down from a high of NZD 70 million (USD 55.3 million).
Korea has a strong seafood consumption culture but growth of New Zealand’s export business has been held back by tariffs between 10 per cent to more than 20 per cent.
The Prime Minister explained that the FTA will next go through a legal verification and translation process, before it can be signed.